CENTRAL SALES TAX

BY
ANIL V
MCOM
14PG01001

Central Sales Tax

Central Sales Tax (CST) is a tax on sales of goods levied by the Central
Government of India. It is applicable only in the case of inter-state sales and
not on sales made within the state or import/export of sales.

Features of CST

a) It extends to the whole of India.

b) Every dealer who makes an inter-state sale must be a registered dealer.
c) There is no exemption limit of turnover for the levy of central sales tax.
d) Under this act, the goods have been classified as:
Declared goods or goods of special importance in inter-state trade or
commerce and
Other goods.
The rates of tax on declared goods are lower as compared to the rate of
tax on goods in the second category.

Important definitions
APPROPRIATE STATE [SECTION 2 (A)]
1) In relation to a dealer who has one or more place of business situated in the same state, that
state.
(2) In relation to a dealer who has more than one place of business situated in different states,
every such state should respect the place.

BUSINESS [SECTION 2 (AA)]

a) Any trade, commerce or manufacture or any adventure or concern in the nature

whether it is carried on with a motive to make gain or profit and whether or not any
profit or gain accrues from it.

DEALER [section 2(B)]

Any person who carries on (whether regularly or otherwise) the business of
buying, selling, supplying or distributing goods, directly or indirectly, for
cash or for commission, remuneration or other valuable consideration.

DECLARED GOODS [section 2(C)]:

Cereals ,Coal, Cotton ,Crude Oil ,Jute ,Oilseeds ,Pulses , Sugar

GOODS [section

2(d)]

This includes all material articles or commodities and all kind of movable
property excluding newspapers, actionable claims, stocks, shares, and
securities. If newspapers are sold as scrap then, it will be charged to central
sales tax if it is an inter- state sale.

PLACE OF BUSINESS [SECTION 2 (DD)]

1. The place of business of agent if, business is carried on through such agent.
2. Place where dealer stores his goods like warehouse, go down.
3. Place where a dealer keeps his books of accounts.

SALE [SECTION 2 (G)]

It means transfer of property in goods by one person to another for cash or for
deferred payment or for any valuable consideration.

SALE PRICE [SECTION 2 (H)]

It means amount payable to a dealer as consideration for the sale of any

Goods

TURNOVER [section 2 (J)]

It is the aggregate of the sale prices received and receivable by the dealer
in respect of sales of any goods in the course of inter-state trade or commerce
made during a prescribed period. Prescribed period is the period in which sales
tax return is filed.

YEAR [section 2(K)

It means the year applicable in relation to a dealer under the general sales tax law
of the appropriate state, and if, there is no such year applicable, it is the financial year.

CST Transaction Forms

Form C
Issued by the purchasing dealer to the selling dealer.

Form D
Issued by the government department which purchases the goods. But is
removed w.e.f. 1-4-2007.

Form E1
This form is issued by the dealer who makes the first inter-state sale during
movement of goods from one State to another.

Form E2
This form is issued by the second or the subsequent seller when the goods
move from one state to another in a series of inter-state sales by transfer of
documents of title.

Form F
This form is issued when goods are dispatched to another state as a consignment or to
the branch of a dealer in another State. Issued by the branch transfer or stock transfer to his
principal dealer.

Form H
This form is issued by an exporter for purchase of goods.

Form I
This form is issued by a dealer located in a Special Economic Zone (SEZ).

Rates Of CST
Originally, the rate of CST was reduced from 4% to 3% w.e.f. 1st April, 2007 where FormD has been withdrawn.

W.e.f. 1st June, 2008 further reduced from 3% to 2% when goods are sold against declaration
in Form C.

EXEMPTION FROM CENTRAL SALES TAX

NO EXEMPTION LIMIT: CST is levied on the turnover made in course of interstate sale. There is no limit for turnover, as it is normally available in case of State
Sales Tax.

Thank You